Executive summary
Lao mobile market recovering after serious disruption by the Beeline dispute
The telecom sector in Laos still has many issues to address. The rate of regulatory reform continues to be well behind industry development and this has the potential to derail the progress already made if the reform is not speeded up. A useful insight into this situation could be observed in the effective isolation of Beeline in 2011. The other three mobile operators stopped interconnection arrangements with Beeline after an agreement of price cutting and promotions broke down in the middle of the year. The situation had arisen in the first instance after the operators experienced rapidly falling ARPUs. The ministry in its regulatory role took the side of the three operators in the dispute. After a long stand-off Beeline was finally reconnected by the other operators. It was clear however that the underlying issues had not been resolved.
In the last five or six years there has been a noticeable shift in the economic and social outlook for Laos. After a number of decades of having to struggle with a poorly performing economy and a commercial environment that was in desperate need of reform, there is now positive news being reported on many fronts for this nation of just over six million people. Most importantly, a significant number of hydro-electric power projects and mining ventures have become reality, with more set to become a reality, and even more possible projects in the pipeline. Laos is finally moving forward in what might be described as a confident fashion. At the same time there has been progress in the strengthening of both the national telecommunications infrastructure and its regulatory regime, although this has not always gone smoothly. One of the major challenges has been the effort to attract more foreign investment into the sector and this remains tightly linked to reform to the regulatory regime.
The building of the country’s infrastructure continues to be a priority. By early 2012 fixed-line teledensity was still low at around two telephones per 100 people, with limited growth occurring in that segment of the market; however, growth in the Lao mobile market has been continuing to surge in a sustained fashion in what has become a highly competitive market.
Coming into 2012, mobile penetration had passed the 80% milestone with the annual growth rate running at around 25%. A particularly strong performance by Unitel, the military-owned operator that has been reinvigorated by the formation of a joint venture with Vietnam’s Viettel, was helping drive the market. At the same time Vimpelcom’s acquisition of Millicom’s subsidiary Tigo and the subsequent launch of its Beeline brand in 2011 has added considerable energy to the mobile market, although critics might judge this energy as less than positive.
In the meantime, internet services in Laos continue to lag. This remains a major concern in terms of the overall social and economic development of the country. The good news is that 2011 saw a boom in the mobile broadband internet services, although it has been hard to get reliable statistics on this part of the market. The expansion of internet and especially broadband into the provinces and the rural areas is high the government’s list of development priorities.
While more foreign investment is needed to boost the telecom sector, the government must also be judicious in selecting and licensing new operators to ensure that it gets the best value out of the investment. The joint venture formed by the government with Thai company Shinawatra back in 1996 let the five-year period of market exclusivity granted to Lao Telecom pass without any serious attention to infrastructure building. When the market was finally opened up to competition in 2002, foreign capital finally started to flow. The mobile phone market took off in early 2003, with the number of subscribers increasing sevenfold in the two years following.
Market highlights:
- The mobile market in Laos continued on a generally positive expansion path in 2011, with annual growth of around 25% and this pattern was continuing into 2012;
- Mobile penetration had reached 80% by end-2011;
- With the Lao government having licensed five mobile operators, competition had really heated up, among other things putting considerable downward pressure on ARPU;
- The market became more competitive following Vietnam’s Viettel forming a joint venture with the military-owned Lao Asia Telecom; the operator had been rebranded Unitel;
- Vimpelcom brokered a deal in 2009 to acquire Millicom’s 78% stake in Tigo; after a long delay the deal was finally given regulatory approval in March 2011; the operator was rebranded Beeline;
- Beeline was denied interconnection for a period by the other mobile operators in 2011 after an agreement on pricing and promotions broke down;
- By 2011 all four mobile operators had launched 3G services;
- Lao Telecom’s Wireless Local Loop (WLL) has been offering fresh impetus in the fixed-line market, although overall subscriber growth remains modest;
- The low penetration and sluggish development of internet services continues to be a problem for both the local telecom industry in particular and the country in general, especially given how crucial online access is to national growth.
- However, mobile broadband internet services were providing some positive news in the market place; this was further boosted by the ISP Planet when it launched a 4G WiMAX service in the capital Vientiane in mid-2011.
Laos – key telecom parameters – 2010 - 2011
Category
| 2010
| 2011 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers1
| 126,200
| 140,000
|
Annual growth
| 6%
| 11%
|
Fixed-line penetration (population)
| 2%
| 2%
|
Fixed-line penetration (household)
| 12%
| 12%
|
Internet:
|
|---|
Total number of subscribers
| 19,000
| 22,500
|
Annual growth
| 20%
| 18%
|
Internet subscriber penetration (population)
| 0.3%
| 0.3%
|
Internet subscriber penetration (household)
| 1.5%
| 1.8%
|
Mobile services:
|
|---|
Total number of subscribers
| 4.0 million
| 5.0 million
|
Annual growth
| 25%
| 25%
|
Mobile penetration (population)
| 65%
| 80%
|
(Source: BuddeComm)
Notes: 1 these figures include Wireless Local Loop (WLL) subscribers
This report provides an overview of the trends and developments in the telecommunications markets in Laos. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Major operators (mobile and fixed);
- Regulatory environment;
- Infrastructure;
- Mobile market;
- Internet market, including broadband.
